Proxy Statement - Merger or Acquistion (definitive) (defm14a)

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETINGS

The following are answers to certain questions that you may have regarding the special meetings. The parties urge you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the appendices to, and the documents incorporated by reference into, this document. In this joint proxy statement/prospectus, we refer to Atlantic Capital Bancshares, Inc. as “Atlantic Capital,” First Security Group, Inc. as “First Security,” Atlantic Capital Bank, a wholly owned subsidiary of Atlantic Capital, as “Atlantic Capital Bank,” FSGBank, National Association, a wholly owned subsidiary of First Security, as “FSGBank,” and FSGBank after it changes its name to “Atlantic Capital Bank, National Association” following the bank merger, as “Surviving Bank.”

 

Q:	Why am I receiving this joint proxy statement/prospectus?

A: Atlantic Capital and First Security have entered into an Agreement and Plan of Merger, dated as of March 25, 2015 (as amended on June 8, 2015, the “merger agreement”) pursuant to which First Security will merge with and into Atlantic Capital, with Atlantic Capital continuing as the surviving company (the “merger”). Immediately following the merger, FSGBank, a wholly owned bank subsidiary of First Security, will merge with and into Atlantic Capital’s wholly owned bank subsidiary, Atlantic Capital Bank, with FSGBank continuing as the surviving bank (the “bank merger”). A copy of the merger agreement is included in this joint proxy statement/prospectus as Appendix A.

The merger cannot be completed unless, among other things:

 

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a majority of Atlantic Capital’s outstanding common stock entitled to vote at the special meeting votes in favor of the merger; and

 

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a majority of First Security’s outstanding common stock entitled to vote at the special meeting votes in favor of the merger.

In addition, both Atlantic Capital and First Security are soliciting proxies from their shareholders with respect to proposals to adjourn the Atlantic Capital and First Security special meetings, as applicable, and if necessary or appropriate, including to solicit additional proxies in favor of their respective proposals to approve the merger agreement and the transactions contemplated thereby, if there are insufficient votes at the time of such adjournment to approve such proposals. First Security shareholders also will be asked to approve the merger-related compensation proposal.

Each of Atlantic Capital and First Security will hold separate special meetings to obtain these approvals. This joint proxy statement/prospectus contains important information about the merger and the other proposals being voted on at the special meetings, and you should read it carefully. It is a joint proxy statement because both the Atlantic Capital and First Security boards of directors are soliciting proxies from their respective shareholders. It is a prospectus because Atlantic Capital will issue shares of Atlantic Capital common stock to holders of First Security common stock in connection with the merger. The enclosed materials allow you to have your shares voted by proxy without attending your respective meeting. Your vote is important. We encourage you to submit your proxy as soon as possible.

 

Q:	Why do Atlantic Capital and First Security want to merge?

A: We believe the combination of Atlantic Capital and First Security will provide Atlantic Capital with significant opportunities for enhanced revenue and growth. Each of the Atlantic Capital and First Security boards of directors has determined that the merger is fair to, and in the best interest of, its respective shareholders, and

 

recommends that its shareholders vote for their respective proposals. You should review the reasons for the merger described in greater detail under “The Merger—First Security’s Reasons for the Merger and Recommendation of the First Security Board of Directors” and “The Merger—Atlantic Capital’s Reasons for the Merger and Recommendation of the Atlantic Capital Board of Directors.”

 

Q:	What will I receive in the merger?

A: Atlantic Capital shareholders: If the merger is completed, Atlantic Capital shareholders will not receive any merger consideration and will continue to hold their shares of Atlantic Capital common stock. Upon the completion of the merger, we expect that Atlantic Capital common stock will be listed on The Nasdaq Global Select Market (“Nasdaq”) and will trade under the symbol “ACBI.”

First Security shareholders: If the merger is completed, First Security shareholders will receive, for each share of First Security common stock held, the right to receive the per share merger consideration provided for in the merger agreement (the “Merger Consideration”), which shall consist of: (i) cash in the amount of $2.35 per share, or (ii) 0.188 shares (the “Exchange Ratio”) of Atlantic Capital common stock.

First Security shareholders may elect to receive all cash, all stock, or any combination of cash and stock. Such elections will be due five business days prior to the effective time of the merger (the “Effective Time”). However, the amount of aggregate cash consideration will be a minimum of $47,097,708 and a maximum of $54,947,326, which will require between 30% to 35% shares of First Security common stock, or between 20,041,578 shares of First Security common stock (the “Cash Election Minimum Threshold”) and 23,381,841 shares of First Security common stock (the “Cash Election Maximum Threshold”) to receive cash.

If the Cash Election Minimum Threshold is undersubscribed, the Merger Consideration will be allocated as follows:

 

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cash election shares will be exchanged for cash;

 

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to the extent necessary to reach the Cash Election Minimum Threshold, shares for which no election was made will be exchanged for cash (on a pro rata basis if excess shares are available); and

 

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if additional cash elections are required to meet the Cash Election Minimum Threshold, stock election shares will be allocated cash on a pro rata basis.

If the Cash Election Maximum Threshold is oversubscribed, the Merger Consideration will be allocated as follows:

 

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stock election shares and shares for which no election was made will receive stock;

 

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to the extent necessary to reach the Cash Election Maximum Threshold, shareholders making a mixed election of cash and stock will have their cash election shares reallocated to stock election shares; and

 

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to the extent necessary to reach the Cash Election Maximum Threshold, shareholders electing all cash will have their shares reallocated to stock election shares (provided that shareholders holding 100 or fewer shares of First Security common stock electing all cash will not have any shares reallocated to stock).

If the number of cash election shares is equal to or greater than the Cash Election Minimum Threshold and equal to or lesser than the Cash Election Maximum Threshold, the Merger Consideration will be allocated as follows:

 

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cash election shares will be exchanged for cash; and

 

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stock election shares and shares for which no election was made will receive stock.

 

Q:	How do I elect the form of Merger Consideration that I prefer?

A: First Security shareholders are receiving an election form concurrently with this joint proxy statement/prospectus. You should complete the election form to specify your preferred type of Merger Consideration (or provide instructions to your broker if you hold your shares in “street name”). If you wish to make an election, you should complete the election form and send it in the envelope provided to Atlantic Capital’s exchange agent, Computershare. To make an effective election, your properly executed election form must be received by Computershare before the close of business five days prior to the Effective Time (the “Election Deadline”). Please read the instructions on the election form for information on completing the form. If you do not return a completed, properly executed election form by the Election Deadline, you will be treated as having made no election and will receive cash or stock or a combination thereof based on the elections made by other First Security shareholders. We will make a public announcement of the expected closing date of the merger at least ten days prior to the anticipated Effective Time. We currently expect the Effective Time of the merger to occur on October 31, 2015, and the Election Deadline to be October 26, 2015.

 

Q:	Can I change my election?

A: Yes, you can change your election by submitting a new election form to Atlantic Capital’s exchange agent, Computershare, so that it is received prior to the Election Deadline. After the Election Deadline, you may not change your election.

 

Q:	What is the value of the shares of Atlantic Capital common stock that I may receive in the merger?

A: The value of the stock consideration received in the merger will depend on the value of Atlantic Capital common stock for which there is currently no public market. On March 25, 2015, in connection with the merger agreement, Atlantic Capital entered into a securities purchase agreement which provides for the sale of approximately 1,984,127 shares of Atlantic Capital common stock at $12.60 per share, which, based on the 0.188 share merger exchange ratio, represents an implied value of $2.37 per share of First Security common stock. It is possible that the consideration received in exchange for each share of First Security common stock could be less than the market value of such share of First Security common stock prior to the merger.

 

Q:	How does the Atlantic Capital Board recommend that Atlantic Capital shareholders vote at the special meeting?

A: The Atlantic Capital Board recommends that Atlantic Capital shareholders vote “FOR” the Atlantic Capital merger proposal and “FOR” the Atlantic Capital adjournment proposal.

 

Q:	How does the First Security Board recommend that First Security shareholders vote at the special meeting?

A: The First Security Board recommends that First Security shareholders vote “FOR” the First Security merger proposal, “FOR” the merger-related compensation proposal, and “FOR” the First Security adjournment proposal.

 

Q:	When and where are the special meetings?

A: Atlantic Capital special meeting. The Atlantic Capital special meeting will be held at The Piedmont Driving Club, 1215 Piedmont Avenue N.E., Atlanta, Georgia 30309, on October 21, 2015, at 9:00 a.m. local time.

First Security special meeting. The First Security special meeting will be held at The Chattanoogan Hotel, Ochs Meeting Room, 1201 Broad Street, Chattanooga, Tennessee 37402, on October 21, 2015, at 3:00 p.m. local time.

 

Q:	Who can vote at the special meetings of shareholders?

A: Atlantic Capital special meeting. Holders of record of Atlantic Capital common stock at the close of business on September 14, 2015, which is the date that the Atlantic Capital Board has fixed as the record date for the Atlantic Capital special meeting, are entitled to vote at the special meeting.

First Security special meeting. Holders of record of First Security common stock at the close of business on September 14, 2015, which is the date that the First Security Board has fixed as the record date for the First Security special meeting, are entitled to vote at the special meeting.

 

Q:	What do I need to do now?

A: After you have carefully read this joint proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly so that your shares are represented and voted at the respective company’s special meeting. If you hold your shares in your name as a shareholder of record, you must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope, or follow the telephone or Internet voting procedures described on the proxy card, as soon as possible. If you hold your shares in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker. You may also cast your vote in person at the respective company’s special meeting. “Street name” shareholders who wish to vote in person at the respective company’s special meeting will need to obtain a proxy form from the institution that holds their shares.

First Security shareholders are receiving an election form concurrently with this joint proxy statement/prospectus. The election form allows First Security shareholders to elect their preferred form of the Merger Consideration. If you wish to make an election, you should complete the election form and send it in the envelope provided to Atlantic Capital’s exchange agent, Computershare. To make an effective election, your properly executed election form must be received by Computershare before the Election Deadline. If you do not return a completed, properly executed election form by the Election Deadline, you will be treated as having made no election and will receive cash or stock or a combination thereof based on the elections made by other First Security shareholders.

 

Q:	What constitutes a quorum for the special meetings?

A: Atlantic Capital special meeting: The presence at the Atlantic Capital special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Atlantic Capital common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business. Abstentions and broker non-votes, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

First Security special meeting: The presence at the First Security special meeting, in person or by proxy, of holders of a majority of the outstanding shares of First Security common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business. Abstentions and broker non-votes, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

Q:	What is the vote required to approve each proposal?

A: Atlantic Capital special meeting: Approval of the Atlantic Capital merger proposal requires the affirmative vote of at least a majority of all of the outstanding shares of Atlantic Capital common stock entitled to vote on the merger as of the close of business on September 14, 2015, the record date for the Atlantic Capital special meeting. If you (1) fail to submit a proxy or vote in person at the Atlantic Capital special meeting, (2) mark “ABSTAIN” on your proxy or (3) fail to instruct your bank or broker how to vote with respect to the proposal to

 

approve the merger agreement, it will have the same effect as a vote “AGAINST” the proposal. Assuming a quorum is present, approval of the Atlantic Capital adjournment proposal requires the affirmative vote of a majority of the shares of Atlantic Capital common stock present at the special meeting, in person or by proxy and entitled to vote as of the close of business on September 14, 2015, the record date for the Atlantic Capital special meeting. If you (1) fail to submit a proxy or vote in person at the Atlantic Capital special meeting, (2) mark “ABSTAIN” on your proxy or (3) fail to instruct your bank or broker how to vote with respect to the Atlantic Capital adjournment proposal, it will have no effect on such proposal.

First Security special meeting: Approval of the First Security merger proposal requires the affirmative vote of a majority of all of the outstanding shares of First Security common stock entitled to vote on the merger as of the close of business on September 14, 2015, the record date for the First Security special meeting. If you (1) fail to submit a proxy or vote in person at the First Security special meeting, (2) mark “ABSTAIN” on your proxy or (3) fail to instruct your bank or broker how to vote with respect to the proposal to approve the merger agreement, it will have the same effect as a vote “AGAINST” the proposal. Approval of the merger-related compensation proposal and the First Security adjournment proposal each require that the votes cast for the proposal exceed the votes cast against the proposal. If you (1) fail to submit a proxy or vote in person at the First Security special meeting, (2) mark “ABSTAIN” on your proxy or (3) fail to instruct your bank or broker how to vote with respect to these proposals, it will have no effect on these proposals.

 

Q:	Why is my vote important?

A: If you do not submit a proxy or vote in person, it may be more difficult for Atlantic Capital or First Security to obtain the necessary quorum to hold their special meetings. In addition, your failure to submit a proxy or vote in person, or failure to instruct your bank or broker how to vote, or abstention will have the same effect as a vote against approval of the merger agreement. The merger agreement must be approved by the affirmative vote of at least a majority of the outstanding shares of each of Atlantic Capital and First Security common stock entitled to vote on the merger agreement.

 

Q:	If my shares are held in “street name” by my bank or broker, will my bank or broker automatically vote my shares for me?

A: If your shares are held in “street name” in a stock brokerage account or by a bank or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to Atlantic Capital or First Security or by voting in person at your respective company’s special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee.

Under the rules of applicable securities exchanges, brokers who hold shares in street name for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that the securities exchanges determine to be “non-routine” without specific instructions from the beneficial owner. It is expected that all proposals to be voted on at the Atlantic Capital special meeting and the First Security special meeting are such “non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power.

If you are an Atlantic Capital shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares:

 

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your broker, bank or other nominee may not vote your shares on the Atlantic Capital merger proposal, which broker non-votes will have the same effect as a vote “AGAINST” such proposal; and

 

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your broker, bank or other nominee may not vote your shares on the Atlantic Capital adjournment proposal, which broker non-votes will have no effect on the vote count for such proposal.

If you are a First Security shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares:

 

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your broker, bank or other nominee may not vote your shares on the First Security merger proposal, which broker non-votes will have the same effect as a vote “AGAINST” such proposal; and

 

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your broker, bank or other nominee may not vote your shares on the merger-related compensation proposal or the First Security adjournment proposal, which broker non-votes will have no effect on the vote count for each such proposal.

 

Q:	What if I abstain from voting or fail to instruct my bank or broker?

A: Atlantic Capital shareholders: With respect to the Atlantic Capital merger proposal, if you (1) fail to submit a proxy or vote in person at the Atlantic Capital special meeting, (2) mark “ABSTAIN” on your proxy or (3) fail to instruct your bank or broker how to vote, it will have the same effect as a vote “AGAINST” the proposal. With respect to the Atlantic Capital adjournment proposal, if you (1) fail to submit a proxy or vote in person at the Atlantic Capital special meeting, (2) mark “ABSTAIN” on your proxy or (3) fail to instruct your bank or broker how to vote, it will have no effect on such proposal.

First Security shareholders: With respect to the First Security merger proposal, if you (1) fail to submit a proxy or vote in person at the First Security special meeting, (2) mark “ABSTAIN” on your proxy or (3) fail to instruct your bank or broker how to vote, it will have the same effect as a vote “AGAINST” the proposal. If you fail to submit a proxy or vote in person at the First Security special meeting or fail to instruct your bank or broker how to vote or mark “ABSTAIN” on your proxy with respect to the merger-related compensation proposal or the First Security adjournment proposal, it will have no effect on such proposal.

 

Q:	Can I attend the special meeting and vote my shares in person?

A: Yes. All shareholders of Atlantic Capital and First Security, including shareholders of record and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend their respective special meetings. Holders of record of Atlantic Capital common stock and holders of record of First Security common stock can vote in person at the Atlantic Capital special meeting and First Security special meeting, respectively. If you are not a shareholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meetings. If you plan to attend your special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted. Atlantic Capital and First Security reserve the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the Atlantic Capital or First Security special meeting is prohibited without Atlantic Capital’s or First Security’s express written consent.

 

Q:	Can I change my vote?

A: Atlantic Capital shareholders: Yes. If you are a holder of record of Atlantic Capital common stock, you may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) timely submitting a later proxy via the telephone or Internet, (3) delivering a written revocation letter to Atlantic Capital’s corporate secretary or (4) attending the special meeting in person, notifying the corporate

 

secretary and voting by ballot at the special meeting. Attendance at the special meeting will not automatically revoke your proxy. A revocation or later-dated proxy received by Atlantic Capital after the Atlantic Capital special meeting will be ineffective. Atlantic Capital’s corporate secretary’s mailing address is: 3280 Peachtree Road NE, Suite 1600, Atlanta, Georgia 30305, Attention: Corporate Secretary. If you hold your shares in “street name” through a bank or broker, you should contact your bank or broker if you want to revoke your proxy.

First Security shareholders: Yes. If you are a holder of record of First Security common stock, you may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) voting by telephone or the Internet at a later time, (3) delivering a written revocation letter to First Security’s corporate secretary or (4) attending the special meeting in person, notifying the corporate secretary and voting by ballot at the special meeting. Attendance at the special meeting will not automatically revoke your proxy. A revocation or later-dated proxy received by First Security after the First Security special meeting will be ineffective. First Security’s corporate secretary’s mailing address is: 531 Broad Street, Chattanooga, Tennessee 37402, Attention: Corporate Secretary. If you hold your shares in “street name” through a bank or broker, you should contact your bank or broker if you want to revoke your proxy.

 

Q:	What are the U.S. federal income tax consequences of the merger to First Security shareholders?

A: The merger is intended to qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). First Security shareholders who receive solely cash in exchange for their First Security common stock will recognize gain or loss for U.S. federal income tax purposes on the shares of First Security common stock exchanged for cash. In general, holders of First Security common stock who receive only shares of Atlantic Capital common stock in the merger are not expected to recognize any gain or loss for U.S. federal income tax purposes, except to the extent of any cash received in lieu of any fractional shares of Atlantic Capital common stock. First Security shareholders who do not elect to receive cash in exchange for their First Security common stock, including both shareholders who make no election and shareholders who elect to receive Atlantic Capital common stock, may nevertheless receive cash in the event that First Security shareholders owning at least 20,041,578 shares of First Security common stock (representing the Cash Election Minimum Threshold of 30% of the total outstanding First Security common stock) do not elect to receive cash in exchange for their First Security common stock. Holders of First Security common stock who receive both cash (other than cash in lieu of fractional shares) and shares of Atlantic Capital common stock in the merger may be required to recognize any gain for U.S. federal income tax purposes, but not in excess of the cash received (in addition to any gain or loss recognized with respect to any cash received in lieu of any fractional shares of Atlantic Capital common stock).

First Security’s obligation to effect the merger is subject to the satisfaction, or waiver by First Security, at or before the Effective Time, of First Security receiving a legal opinion of its counsel as to the tax-free nature of the merger. Atlantic Capital’s obligation to effect the merger is subject to the satisfaction, or waiver by Atlantic Capital, at or before the Effective Time, of Atlantic Capital receiving a legal opinion of its counsel as to the tax-free nature of the merger.

For further information, see “The Merger—Material U.S. Federal Income Tax Consequences of the Merger.”

The U.S. federal income tax consequences described above may not apply to all holders of First Security common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your own tax advisor to determine the particular tax consequences of the merger to you.

 

Q:	Am I entitled to appraisal rights?

A: Atlantic Capital shareholders: No, Atlantic Capital shareholders are not entitled to any dissenter or appraisal rights under Georgia law in connection with any of the proposals.

 

First Security shareholders: No, First Security shareholders are not entitled to any dissenter or appraisal rights under Tennessee law in connection with any of the proposals because First Security common stock is listed and trades on the Nasdaq Capital Market.

 

Q:	If I am a First Security shareholder, should I send in my First Security stock certificates now?

A: No. Please do not send in your First Security stock certificates with your proxy. Atlantic Capital’s exchange agent, Computershare, will send you instructions for exchanging First Security stock certificates for the Merger Consideration. See “The Merger Agreement—Election to Receive Stock or Cash—Letter of Transmittal; Exchange of Shares.”

 

Q:	What should I do if I hold my shares of First Security stock in book-entry form?

A: You should return your election form, and follow the instructions provided on the election form, in order to make your election of the Merger Consideration. See “The Merger Agreement—Election to Receive Stock or Cash—Letter of Transmittal; Exchange of Shares.”

 

Q:	Whom may I contact if I cannot locate my First Security stock certificate(s)?

A: If you are unable to locate your original First Security stock certificate(s), you should contact First Security’s transfer agent, Computershare, at 10 Commerce Drive, Cranford, New Jersey 07016-3572, or at (800) 368-5948. Following the merger, any inquiries should be directed to Atlantic Capital’s transfer agent, which is also Computershare, at 211 Quality Circle, Suite 210, College Station, Texas 77845, or at (800) 368-5948.

 

Q:	When do you expect to complete the merger?

A: Atlantic Capital and First Security expect to complete the merger on October 31, 2015. However, neither Atlantic Capital nor First Security can assure you when or if the merger will occur. In addition to other customary closing conditions provided in the merger agreement, Atlantic Capital and First Security must first obtain the approval of Atlantic Capital shareholders and First Security shareholders for the merger.

 

Q:	Who may solicit proxies on behalf of Atlantic Capital or First Security?

A: Atlantic Capital shareholders: In addition to solicitation of proxies by Atlantic Capital by mail, proxies may also be solicited by Atlantic Capital’s directors and employees personally, and by telephone, facsimile or other means. For more information on solicitation of proxies in connection with the Atlantic Capital special meeting, see “The Atlantic Capital Special Shareholders Meeting—Solicitation of Proxies.”

First Security shareholders: In addition to solicitation of proxies by First Security by mail, proxies may also be solicited by First Security’s directors and employees personally, and by telephone, facsimile or other means. For more information on solicitation of proxies in connection with the First Security special meeting, see “The First Security Special Shareholders Meeting—Solicitation of Proxies.”

 

Q:	Whom should I call with questions?

A: Atlantic Capital shareholders: If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus or need help voting your shares of Atlantic Capital common stock, please contact: Carol H. Tiarsmith, Executive Vice President and Chief Financial Officer, 3280 Peachtree Road NE, Suite 1600, Atlanta, Georgia 30305, (404) 995-6050.

First Security shareholders: If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus or need help voting your shares of First Security common stock, please contact: John R. Haddock, Chief Financial Officer, Executive Vice President and Secretary, 531 Broad Street, Chattanooga, Tennessee 37402, (423) 308-2075.

 

Important Notice Regarding the Availability of Proxy Materials for the Atlantic Capital

Special Shareholder Meeting to be Held on October 21, 2015.

The Notice of Special Meeting and this Joint Proxy Statement/Prospectus are available at:

www.envisionreports.com/ACBI

Important Notice Regarding the Availability of Proxy Materials for the First Security Special Shareholder Meeting to be Held on October 21, 2015.

The Notice of Special Meeting and this Joint Proxy Statement/Prospectus are available at:

www.edocumentview.com/FSGI

 

SUMMARY

This summary highlights selected information from this joint proxy statement/prospectus. It does not contain all of the information that may be important to you. We urge you to read carefully the entire document and the other documents we refer you to so that you may fully understand the merger and the related transactions. In addition, we incorporate by reference into this joint proxy statement/prospectus important business and financial information about First Security. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” on page 242. Each item in this summary refers to the page of this joint proxy statement/prospectus on which that subject is discussed in more detail. Unless otherwise indicated in this joint proxy statement/prospectus or the context otherwise requires, all references in this joint proxy statement/prospectus to “Atlantic Capital” refer to Atlantic Capital Bancshares, Inc., all references to “Atlantic Capital Bank” refer to Atlantic Capital Bank, Atlantic Capital’s wholly-owned subsidiary, all references to “First Security” refer to First Security Group, Inc., all references to “FSGBank” refer to FSGBank, National Association, First Security’s wholly-owned subsidiary, all references to “Surviving Bank” refer to FSGBank after it changes its name to “Atlantic Capital Bank, National Association” following the bank merger, all references to the “merger agreement” refer to the Agreement and Plan of Merger dated March 25, 2015, as amended on June 8, 2015, by and between Atlantic Capital and First Security, all references to the “merger” refer to the merger of First Security with and into Atlantic Capital, with Atlantic Capital continuing as the surviving company, and all references to the “bank merger” refer to the merger of Atlantic Capital Bank with and into FSGBank, with FSGBank continuing as the surviving bank.

Information Regarding Atlantic Capital and First Security

Atlantic Capital

Atlantic Capital Bancshares, Inc.

3280 Peachtree Road NE, Suite 1600

Atlanta, Georgia 30305

Telephone: (404) 995-6050

Atlantic Capital Bancshares, Inc. serves as the bank holding company for Atlantic Capital Bank, which commenced operations on May 15, 2007. Atlantic Capital Bank operates as a full service, locally-managed commercial bank headquartered in Atlanta, Georgia and is focused on the primary geographic markets of Metropolitan Atlanta, the State of Georgia and the southeastern United States.

Atlantic Capital Bank provides a competitive array of credit, treasury management, and deposit products and services to emerging growth businesses, middle market corporations, commercial real estate developers and investors, and private clients.

As of June 30, 2015, Atlantic Capital had consolidated assets, deposits and shareholders’ equity of approximately $1.4 billion, $1.1 billion and $146 million, respectively.

First Security

First Security Group, Inc.

531 Broad Street

Chattanooga, Tennessee 37402

Telephone: (423) 266-2000

 

First Security is a bank holding company headquartered in Chattanooga, Tennessee. Founded in 1999, First Security’s community bank subsidiary, FSGBank, has 26 full-service banking offices along the interstate corridors of eastern and middle Tennessee and northern Georgia. FSGBank provides retail and commercial banking services, trust and investment management, mortgage banking, financial planning, and internet banking.

As of June 30, 2015, First Security had consolidated assets, deposits and shareholders’ equity of $1.1 billion, $922 million and $91 million, respectively.

The Merger (see page 67)

The terms and conditions of the merger are contained in the merger agreement, a copy of which is included as Appendix A to this joint proxy statement/prospectus and is incorporated by reference herein. You should read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.

In the merger, First Security will merge with and into Atlantic Capital, with Atlantic Capital as the surviving company in the merger. Immediately following the merger of First Security into Atlantic Capital, or as soon as practicable thereafter, Atlantic Capital Bank will merge with and into FSGBank, with FSGBank as the surviving bank of such merger.

Closing and Effective Time of the Merger (see page 115)

The closing date of the merger is currently expected to occur on October 31, 2015. Simultaneously with the closing of the merger, Atlantic Capital will file articles of merger with the Georgia Secretary of State and the Tennessee Secretary of State. The merger will become effective at such time as the articles of merger are filed or such other time as may be specified in the articles of merger (the “Effective Time”). Neither Atlantic Capital nor First Security can predict, however, the actual date on which the merger will be completed because it is subject to factors beyond each company’s control, including whether or when the parties’ respective shareholders’ approvals will be received.

Merger Consideration (see pages 114 and 115)

If the merger is completed, First Security shareholders may elect to receive, subject to further adjustment and allocation, for each share of First Security common stock held: (i) cash in the amount of $2.35 per share, or (ii) 0.188 shares of Atlantic Capital common stock (together, the “Merger Consideration”). First Security shareholders are receiving an election form concurrently with this joint proxy statement/prospectus. The election form allows shareholders to elect their preferred form of Merger Consideration, and includes a letter of transmittal and instructions for the surrender of the holder’s First Security stock certificate(s) or book-entry shares for the Merger Consideration to which such holder is entitled pursuant to the merger agreement. Please do not send in your certificate(s) until you receive these instructions.

First Security shareholders may elect to receive all cash, all stock, or any combination of cash and stock. Such elections will be due five business days prior to the Effective Time. However, the amount of aggregate cash consideration will be a minimum of $47,097,708 and a maximum of $54,947,326, which will require between 30% to 35% of First Security common stock, or between 20,041,578 shares (the “Cash Election Minimum Threshold”) and 23,381,841 shares (the “Cash Election Maximum Threshold”) to receive cash.

If the Cash Election Minimum Threshold is undersubscribed, the Merger Consideration will be allocated as follows:

 

•

cash election shares will be exchanged for cash;

 

•

to the extent necessary to reach the Cash Election Minimum Threshold, shares for which no election was made will be exchanged for cash (on a pro rata basis if excess shares are available); and

 

•

if additional cash elections are required to meet the Cash Election Minimum Threshold, stock election shares will be allocated cash on a pro rata basis.

If the Cash Election Maximum Threshold is oversubscribed, the Merger Consideration will be allocated as follows:

 

•

stock election shares and shares for which no election was made will receive stock;

 

•

to the extent necessary to reach the Cash Election Maximum Threshold, shareholders making a mixed election of cash and stock will have their cash election shares reallocated to stock election shares; and

 

•

to the extent necessary to reach the Cash Election Maximum Threshold, shareholders electing all cash will have their shares reallocated to stock election shares (provided that shareholders holding 100 or fewer shares of First Security common stock electing all cash will not have any shares reallocated to stock).

If the number of cash election shares is equal to or greater than the Cash Election Minimum Threshold and equal to or lesser than the Cash Election Maximum Threshold, the Merger Consideration will be allocated as follows:

 

•

cash election shares will be exchanged for cash; and

 

•

stock election shares and shares for which no election was made will receive stock.

First Security shareholders will receive cash for any fractional shares of Atlantic Capital common stock owed to them.

Equity Offering and Debt Offering (see pages 106 and 108)

It is a condition to the completion of the merger that Atlantic Capital shall have received proceeds in an amount sufficient to consummate the merger and the other transactions contemplated by the merger agreement (i) from the sale of Atlantic Capital common stock pursuant to the terms of that certain Securities Purchase Agreement dated as of March 25, 2015 between Atlantic Capital and Trident IV, L.P. and Trident IV Professionals Fund, L.P. (collectively, “Stone Point,” the underlying agreement is referred to herein as the “Stone Point Securities Purchase Agreement,” and the underlying transaction referred to herein as the “Equity Offering”) in the amount of approximately $25 million, and from the sale of debt securities of Atlantic Capital on terms reasonably acceptable to Atlantic Capital and First Security (the “Debt Offering”) currently anticipated to be in the amount of approximately $50 million, or (ii) from one or more alternative sources of financing on terms and conditions that are reasonably acceptable to Atlantic Capital and First Security. The Stone Point Securities Purchase Agreement provides for the sale by Atlantic Capital of approximately 1,984,127 shares of Atlantic Capital common stock at $12.60 per share.

Atlantic Capital currently expects to offer, in a private placement, up to approximately $50 million principal amount of subordinated notes, which qualify as Tier 2 capital as provided in the Federal Reserve’s capital rules. The notes are not offered hereby and will be separately offered and sold only to “qualified institutional buyers” (as defined in SEC Rule 144A) pursuant to a private placement memorandum. Each of the Equity Offering and the Debt Offering is expected to be completed prior to the Effective Time. The aggregate proceeds from the Equity Offering and the Debt Offering are expected to be used to pay the cash merger consideration. Atlantic Capital intends to use the net proceeds, if any, after paying the cash portion of the merger consideration, for general corporate purposes, including, but not limited to, paying expenses related to the merger and maintaining capital levels.

 

Material U.S. Federal Income Tax Consequences of the Merger (see page 109)

The merger is intended to qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). First Security shareholders who receive solely cash will recognize gain or loss for U.S. federal income tax purposes on the shares of First Security common stock exchanged for cash. In general, holders of First Security common stock who receive only shares of Atlantic Capital common stock in the merger will not recognize any gain or loss for U.S. federal income tax purposes, except to the extent of any cash received in lieu of any fractional shares of Atlantic Capital common stock. First Security shareholders who do not elect to receive cash in exchange for their First Security common stock, including both shareholders who make no election and shareholders who elect to receive Atlantic Capital common stock, may nevertheless receive cash in the event that First Security shareholders owning at least 20,041,578 shares of First Security common stock (representing the Cash Election Minimum Threshold of 30% of the total outstanding First Security common stock) do not elect to receive cash in exchange for their First Security common stock. Holders of First Security common stock who receive both cash (other than cash in lieu of fractional shares) and shares of Atlantic Capital common stock in the merger may be required to recognize any gain for U.S. federal income tax purposes, but not in excess of the cash received (in addition to any gain or loss recognized with respect to any cash received in lieu of any fractional shares of Atlantic Capital common stock).

First Security’s obligation to effect the merger is subject to the satisfaction, or waiver by First Security, at or before the Effective Time, of First Security receiving a legal opinion of its counsel as to the tax-free nature of the merger. Atlantic Capital’s obligation to effect the merger is subject to the satisfaction, or waiver by Atlantic Capital, at or before the Effective Time, of Atlantic Capital receiving a legal opinion of its counsel as to the tax-free nature of the merger.

The U.S. federal income tax consequences described above may not apply to all First Security shareholders. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your own tax advisor to determine the particular tax consequences of the merger to you.

Dissenters’ Rights (see page 109)

Under Georgia law, Atlantic Capital shareholders do not have the right to dissent from the merger and receive a cash payment equal to the fair value of their shares of Atlantic Capital stock.

Under Tennessee law, First Security shareholders do not have the right to dissent from the merger and receive a cash payment equal to the fair value of their shares of First Security stock instead of receiving the Merger Consideration.

Opinion of Atlantic Capital’s Financial Advisor (see page 95 and Appendix B)

Macquarie Capital (USA), Inc. (“Macquarie”) has delivered a written opinion dated March 25, 2015 to the board of directors of Atlantic Capital (the “Atlantic Capital Board”) that, as of the date of the opinion, based upon and subject to certain matters stated in the opinion, the merger consideration to be paid by Atlantic Capital in the merger pursuant to the merger agreement is fair, from a financial point of view, to Atlantic Capital. We have attached this opinion to this joint proxy statement/prospectus as Appendix B. The opinion of Macquarie is not a recommendation to any Atlantic Capital shareholder as to how to vote on the Atlantic Capital merger proposal. You should read this opinion completely to understand the procedures followed, matters considered and limitations and qualifications on the reviews undertaken by Macquarie in providing its opinion.

For further information, please see the section entitled “The Merger—Opinion of Financial Advisor to Atlantic Capital” beginning on page 95.

 

Opinion of First Security’s Financial Advisor (see page 76 and Appendix C)

Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”) delivered a written opinion to the board of directors of First Security (the “First Security Board”) that, as of the date of such opinion, based upon and subject to certain matters stated in the opinion, the merger consideration contemplated by the merger agreement, as amended, was fair to the holders of First Security common stock from a financial point of view. We have attached the opinion to this joint proxy statement/prospectus as Appendix C. The opinion of Sandler O’Neill is not a recommendation to any First Security shareholder as to how to vote on the First Security merger proposal. You should read the opinion completely to understand the procedures followed, matters considered and limitations and qualifications on the reviews undertaken by Sandler O’Neill in providing its opinion.

For further information, please see the section entitled “The Merger—Opinion of Financial Advisor to First Security” beginning on page 76.

Recommendation of the Atlantic Capital Board (see page 93)

After careful consideration, the Atlantic Capital Board recommends that Atlantic Capital shareholders vote “FOR” the Atlantic Capital merger proposal, and “FOR” the Atlantic Capital adjournment proposal.

Each of the directors and certain large shareholders of Atlantic Capital has entered into a support agreement with Atlantic Capital pursuant to which each has agreed to vote “FOR” the approval of the merger agreement and any other matter required to be approved by the shareholders of Atlantic Capital to facilitate the transactions contemplated by the merger agreement, subject to the terms of the support agreements. As of the record date for the Atlantic Capital special meeting, approximately 48.5% of the outstanding shares of Atlantic Capital common stock entitled to vote at the Atlantic Capital special meeting were subject to support agreements.

For more information regarding the support agreements, please see the section entitled “The Atlantic Capital Special Shareholders Meeting—Shares Subject to Support Agreements; Shares Held by Directors and Executive Officers.”

For a more complete description of Atlantic Capital’s reasons for the merger and the recommendation of the Atlantic Capital Board, please see the section entitled “The Merger—Atlantic Capital’s Reasons for the Merger and Recommendation of the Atlantic Capital Board of Directors” beginning on page 93.

Interests of Atlantic Capital Directors and Executive Officers in the Merger (see page 104)

In considering the recommendation of the Atlantic Capital Board with respect to the Atlantic Capital merger proposal, you should be aware that some of Atlantic Capital’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of Atlantic Capital’s shareholders generally. Interests of officers and directors that may be different from or in addition to the interests of Atlantic Capital’s shareholders include:

 

•

the Atlantic Capital Board has the right to appoint eight individuals, who may or may not be existing members of the Atlantic Capital Board, to the boards of directors of Atlantic Capital and the Surviving Bank following the merger;

 

•

certain payments due under employment and retention agreements; and

 

•

the terms of the director support agreements.

These interests are discussed in more detail in the section entitled “The Merger—Atlantic Capital’s Directors and Officers Have Financial Interests in the Merger” beginning on page 104. The Atlantic Capital Board was aware of the different or additional interests set forth herein and considered such interests along with other matters in adopting and approving the merger agreement and the transactions contemplated thereby, including the merger.

 

Recommendation of the First Security Board (see page 74)

After careful consideration, the First Security Board recommends that First Security shareholders vote “FOR” the First Security merger proposal, “FOR” the merger-related compensation proposal, and “FOR” the First Security adjournment proposal.

Each of the directors of First Security and certain large shareholders of First Security has entered into a support agreement with Atlantic Capital pursuant to which each has agreed to vote “FOR” the approval of the merger agreement and any other matter required to be approved by the shareholders of First Security to facilitate the transactions contemplated by the merger agreement, subject to the terms of the support agreements. As of the record date for the First Security special meeting, approximately 28.4% of the outstanding shares of First Security common stock entitled to vote at the First Security special meeting are subject to support agreements.

For more information regarding the support agreements, please see the section entitled “The First Security Special Shareholders Meeting—Shares Subject to Support Agreements; Shares Held by Directors and Executive Officers.”

For a more complete description of First Security’s reasons for the merger and the recommendation of the First Security Board, please see the section entitled “The Merger—First Security’s Reasons for the Merger and Recommendation of the First Security Board of Directors” beginning on page 74.

Interests of First Security Directors and Executive Officers in the Merger (see page 88)

In considering the recommendation of the First Security Board with respect to the First Security merger proposal, you should be aware that some of First Security’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of First Security’s shareholders generally. Interests of officers and directors that may be different from or in addition to the interests of First Security’s shareholders include:

 

•

the First Security Board has the right to appoint five individuals, who may or may not be existing members of the First Security Board, to the boards of directors of Atlantic Capital and the Surviving Bank following the merger;

 

•

certain payments due under employment agreements;

 

•

the treatment of currently outstanding restricted stock and stock options;

 

•

merger agreement provisions providing for indemnification and insurance; and

 

•

the terms of the director support agreements.

These interests are discussed in more detail in the section entitled “The Merger—First Security’s Directors and Officers Have Financial Interests in the Merger” beginning on page 88. The First Security Board was aware of the different or additional interests set forth herein and considered such interests along with other matters in adopting and approving the merger agreement and the transactions contemplated thereby, including the merger.

Treatment of First Security Equity Awards (see page 116)

As of the Effective Time, Atlantic Capital will either: (i) assume any stock-based awards granted by First Security, including but not limited to awards granted under First Security’s 2012 Long-Term Incentive Plan, the Second Amended and Restated 1999 Long-Term Incentive Plan and the 2002 Long-Term Incentive Plan (collectively, the “First Security Stock Awards”) substantially in accordance with the terms of the First Security Stock Awards; or (ii) substitute the First Security Stock Awards for substantially identical awards under any Atlantic Capital stock plans or other plans to be adopted by Atlantic Capital before the Effective Time, such that after the merger and without any action on the part of the holders of any First Security Stock Awards, the First

 

Security Stock Awards shall be converted into and become rights with respect to Atlantic Capital common stock. From and after the Effective Time and after giving effect to the foregoing assumption or substitution: (i) each First Security Stock Award assumed or substituted by Atlantic Capital may be exercised solely for shares of Atlantic Capital common stock; (ii) the number of shares of Atlantic Capital common stock subject to such First Security Stock Award shall be equal to the number of shares of First Security common stock subject to such First Security Stock Award immediately prior to the Effective Time multiplied by the Exchange Ratio (rounded down to the nearest whole share); and (iii) the per share exercise price under each such First Security Stock Award shall be adjusted to reflect the Exchange Ratio (rounded up to the nearest whole cent).

Regulatory Approvals (see page 108)

Atlantic Capital and First Security must obtain all regulatory approvals, waivers and non-objections required to complete the transactions contemplated by the merger agreement. These approvals include approval from the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Comptroller of the Currency (the “OCC”) and the Georgia Department of Banking and Finance (the “DBF”). These approvals, subject to applicable waiting periods, have been received. Approval or non-objection by the regulators does not constitute an endorsement of the merger or a determination that the terms of the merger are fair to either First Security or Atlantic Capital shareholders.

Conditions to Completion of the Merger (see page 122)

The completion of the merger depends on a number of conditions being satisfied or, where permitted, waived, including:

 

•

approval of the merger shall have been obtained by the requisite affirmative vote of the holders of Atlantic Capital common stock and First Security common stock entitled to vote thereon;

 

•

the shares of Atlantic Capital common stock to be issued to the holders of First Security common stock upon consummation of the merger shall have been authorized for listing on the Nasdaq Global Select Market (or such other national securities exchange mutually agreed upon by the parties), subject only to official notice of issuance;

 

•

this Registration Statement on Form S-4 shall have become effective under the Securities Act, no stop order suspending the effectiveness of this Registration Statement on Form S-4 shall have been issued and no proceedings for that purpose shall have been initiated or, to the knowledge of Atlantic Capital or First Security, threatened by the SEC;

 

•

no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger or any of the other transactions contemplated by the merger agreement shall be in effect, and no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any governmental entity that prohibits or makes illegal consummation of the merger;

 

•

all regulatory approvals required to consummate the transactions contemplated by the merger agreement, including the merger and the bank merger, shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired, and no such regulatory approval shall have resulted in the imposition of any Materially Burdensome Regulatory Condition (as defined in the merger agreement);

 

•

Atlantic Capital shall have received proceeds in an amount sufficient to consummate the merger and the other transactions contemplated by the merger agreement (i) from the Equity Offering and the Debt Offering, or (ii) from one or more alternative sources of financing on terms and conditions that are reasonably acceptable to Atlantic Capital and First Security (each of the Equity Offering and the Debt Offering are expected to be completed prior to the Effective Time);

 

•

each party’s representations and warranties in the merger agreement shall be true and correct, subject to any materiality standards set forth in the merger agreement, as of the date of the merger agreement and as of the Effective Time as though made on and as of the Effective Time;

 

•

each party shall have performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the Effective Time;

 

•

each party shall have received a legal opinion of its counsel as to the tax-free nature of the merger;

 

•

in the case of Atlantic Capital, each member of the First Security Board and certain First Security shareholders shall have executed and delivered to Atlantic Capital a support agreement (in the form attached as Exhibit D (in the case of directors) or Exhibit E (in the case of shareholders) to the merger agreement); and

 

•

in the case of First Security, each member of the Atlantic Capital Board and certain Atlantic Capital shareholders shall have executed and delivered to First Security a support agreement (in the form attached as Exhibit D (in the case of directors) or Exhibit E (in the case of shareholders) to the merger agreement).

No assurance is given as to when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

No Solicitation (see page 121)

Both parties have agreed to a number of limitations with respect to soliciting, negotiating and discussing acquisition proposals involving other potential transactions and to certain related matters. The merger agreement does not, however, prohibit either party from considering an unsolicited bona fide transaction proposal from a third party if certain specified conditions are met.

Termination (see page 123)

The merger agreement may be terminated at any time prior to the Effective Time:

 

•

by the mutual written consent of Atlantic Capital and First Security;

 

•

by either Atlantic Capital or First Security, in the event: (i) of the issuance of a final order or the taking of any action by a governmental entity that prevents the merger or bank merger, or (ii) that a governmental entity states that it will not approve the merger or bank merger, provided that the party seeking to terminate the merger agreement is not a substantial cause of, or substantial factor in, such action or statement by such governmental entity;

 

•

by either Atlantic Capital or First Security if the merger does not occur on or before March 25, 2016, provided that the failure of the party seeking to terminate the merger agreement to fulfill its obligations under the merger agreement was not a substantial cause of, or substantial factor in, the merger not having occurred by such date;

 

•

by either Atlantic Capital or First Security if either party’s shareholder meeting to approve the merger does not result in shareholder approval of the merger, provided that the failure of the party seeking to terminate the merger agreement to perform its obligations under the merger agreement was not a substantial cause of, or substantial factor in, such shareholder approval not having been obtained;

 

•

by Atlantic Capital or First Security (provided that such terminating party is not then in breach of any representation, warranty, covenant or other agreement contained in the merger agreement that results in the failure of a condition to the merger to be satisfied), if the other party has breached or failed to

 

perform any of its representations, warranties or obligations resulting in a failure of a condition to the merger, and such breach or failure cannot be cured by March 25, 2016 (or, if capable of being cured by March 25, 2016, has not been cured within 30 days after receipt of written notice of such breach or failure);

 

•

by Atlantic Capital or First Security prior to the receipt of the approval of the merger by the other party’s shareholders if: (i) the other party’s board of directors shall have failed to recommend that its shareholders approve the merger or failed to reject a takeover proposal (as defined in the merger agreement) by a third party (except if undertaken in compliance with the merger agreement); (ii) the board of directors of the other party fails to reject a takeover proposal from a third party and, in certain cases, reaffirm its recommendation that its shareholders vote in favor of the merger; (iii) the other party enters into a definitive agreement relating to a takeover proposal; (iv) the other party fails to comply with certain non-solicitation provisions of the merger agreement; (v) the other party fails to call, give proper notice of, convene, and hold a shareholders meeting to approve the merger; or (vi) the other party or its board of directors publicly announce its intention to do any of the foregoing;

 

•

by Atlantic Capital or First Security prior to the receipt of approval of the merger by its shareholders in order to enter into a definitive merger agreement or other definitive purchase or acquisition agreement relating to a superior proposal (as defined in the merger agreement) if it has complied in all material respects with certain non-solicitation provisions of the merger agreement and has paid a termination fee and expense reimbursement to the other party; or

 

•

by either Atlantic Capital or First Security if (i) the Department of the Treasury adopts final regulations relating to the determination of the “adjusted Federal long-term rate” or other regulations having a similar effect on the determination of the “adjusted Federal long-term rate”; and (ii) the “long-term tax-exempt rate” is 2.20% or less; provided, however, that such termination may only occur during a 20-day period commencing on the first day of the month in which the second condition is satisfied.

Termination Fee (see page 124)

First Security must reimburse Atlantic Capital for expenses up to $1,000,000 and pay Atlantic Capital a termination fee of $6,250,000 if:

 

•

First Security shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement, which breach or failure to perform (i) would result in a failure of specified conditions in the merger agreement and (ii) (A) cannot be cured by March 25, 2016 or (B) if capable of being cured by March 25, 2016, shall not have been cured within thirty (30) business days following receipt of written notice from Atlantic Capital of such breach or failure; or

 

•

prior to the receipt of the approval of the merger by First Security shareholders: (i) the First Security Board shall have effected a First Security Adverse Recommendation Change (as defined in the merger agreement) except in compliance with the merger agreement; (ii) the First Security Board shall have failed to reject a Takeover Proposal (as defined in the merger agreement) with respect to First Security and reaffirm the First Security Board Recommendation (as defined in the merger agreement) within five (5) business days following the public announcement of such Takeover Proposal and in any event at least two (2) business days prior to the special meeting of First Security shareholders; (iii) First Security enters into an Acquisition Agreement (as defined in the merger agreement); (iv) First Security shall have failed to comply in all material respects with its obligations under the merger agreement; (v) subject to First Security’s rights to adjourn or postpone the special meeting of First Security shareholders, First Security shall have failed to call, give proper notice of, convene and hold the special meeting of First Security shareholders; or (vi) First Security or the First Security Board shall have publicly announced its intention to do any of the foregoing; or

 

•

prior to First Security shareholders approving the merger, First Security terminates the merger agreement in order to enter into a definitive merger agreement or other definitive purchase or acquisition agreement that constitutes a Superior Proposal.

Atlantic Capital must reimburse First Security for expenses up to $1,000,000 and pay First Security a termination fee of $6,250,000 if:

 

•

Atlantic Capital shall have breached or failed to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement, which breach or failure to perform (i) would result in a failure of specified conditions set forth in the merger agreement and (ii) (A) cannot be cured by March 25, 2016 or (B) if capable of being cured by March 25, 2016, shall not have been cured within thirty (30) business days following receipt of written notice from First Security of such breach or failure; or

 

•

prior to the receipt of the approval of the merger by Atlantic Capital shareholders: (i) the Atlantic Capital Board shall have effected an Atlantic Capital Adverse Recommendation Change except in compliance with the merger agreement; (ii) the Atlantic Capital Board shall have failed to reject a Takeover Proposal with respect to Atlantic Capital within five (5) business days following the public announcement of such Takeover Proposal and in any event at least two (2) business days prior to the special meeting of Atlantic Capital shareholders; (iii) Atlantic Capital enters into an Acquisition Agreement; (iv) Atlantic Capital shall have failed to comply in all material respects with its obligations under the merger agreement; (v) subject to Atlantic Capital’s rights to adjourn or postpone the special meeting of Atlantic Capital shareholders, Atlantic Capital shall have failed to call, give proper notice of, convene and hold the special meeting of Atlantic Capital shareholders; or (vi) Atlantic Capital or the Atlantic Capital Board shall have publicly announced its intention to do any of the foregoing; or

 

•

prior to Atlantic Capital shareholders approving the merger, Atlantic Capital terminates the merger agreement in order to enter into a definitive merger agreement or other definitive purchase or acquisition agreement that constitutes a Superior Proposal.

Nasdaq Listing (see page 108)

Upon the completion of the merger, we expect that Atlantic Capital common stock will be listed on Nasdaq and will trade under the symbol “ACBI.”

Effect on First Security’s Deferred Tax Assets (see page 108)

First Security has generated net deferred tax assets, totaling approximately $61.7 million as of June 30, 2015, which includes net operating losses incurred in recent years. Under Section 382 of the Internal Revenue Code, the merger is expected to result in a limitation on the use of these deferred tax assets. We expect to retain approximately $46.4 million, or a permanent reduction of $15.3 million, for future use following the merger.

Accounting Treatment (see page 109)

Atlantic Capital will account for the merger under the acquisition method of accounting for business combinations under U.S. generally accepted accounting principles (“GAAP”).

Atlantic Capital Special Meeting (see page 55)

The special meeting of Atlantic Capital shareholders will be held at The Piedmont Driving Club, 1215 Piedmont Avenue N.E., Atlanta, Georgia 30309, on October 21, 2015, at 9:00 a.m. local time. At the special meeting, Atlantic Capital shareholders will be asked to vote on:

 

•

the Atlantic Capital merger proposal;

 

•

the Atlantic Capital adjournment proposal; and

 

•

any other matters as may properly be brought before the special meeting or any adjournment or postponement of the special meeting.

Holders of Atlantic Capital common stock as of the close of business on September 14, 2015 are entitled to notice of and to vote at the Atlantic Capital special meeting. As of the record date, there were 13,562,125 shares of Atlantic Capital common stock outstanding and entitled to vote held by approximately 458 holders of record. Each Atlantic Capital shareholder can cast one vote for each share of Atlantic Capital common stock owned on the record date.

As of the record date, directors and executive officers of Atlantic Capital and their affiliates owned and were entitled to vote 1,672,266 shares of Atlantic Capital common stock, representing approximately 11.7% of the shares of Atlantic Capital outstanding and entitled to vote on that date. As of the record date, First Security did not own or have the right to vote any of the outstanding shares of Atlantic Capital common stock.

First Security Special Meeting (see page 59)

The special meeting of First Security shareholders will be held at The Chattanoogan Hotel, Ochs Meeting Room, 1201 Broad Street, Chattanooga, Tennessee 37402, on October 21, 2015, at 3:00 p.m. local time. At the special meeting, First Security shareholders will be asked to vote on:

 

•

the First Security merger proposal;

 

•

the merger-related compensation proposal;

 

•

the First Security adjournment proposal; and

 

•

any other matters as may properly be brought before the special meeting or any adjournment or postponement of the special meeting.

Holders of First Security common stock as of the close of business on September 14, 2015 will be entitled to vote at the special meeting. As of the record date, there were 66,797,923 shares of First Security common stock outstanding and entitled to notice and to vote held by approximately 808 holders of record. Each First Security shareholder can cast one vote for each share of First Security common stock owned on the record date.

As of the record date, directors and executive officers of First Security and their affiliates owned and were entitled to vote 1,951,964 shares of First Security common stock, representing approximately 2.6% of the shares of First Security outstanding and entitled to vote on that date. As of the record date, Atlantic Capital did not own or have the right to vote any of the outstanding shares of First Security common stock.

Required Shareholder Votes (see pages 55 and 59)

In order to approve the merger agreement and the transactions contemplated thereby, the holders of a majority of the outstanding shares of Atlantic Capital common stock entitled to be cast at the Atlantic Capital special meeting must vote in favor of the merger agreement. In order to approve the merger agreement, the holders of at least a majority of the outstanding shares of First Security common stock entitled to be cast at the First Security special meeting must vote in favor of the merger.

No Restrictions on Resale (see page 109)

All shares of Atlantic Capital common stock received by First Security shareholders in the merger will be freely tradable, except that shares of Atlantic Capital received by persons who are or become affiliates of Atlantic Capital for purposes of Rule 144 under the Securities Act may be resold by them only in transactions permitted by Rule 144, or as otherwise permitted under the Securities Act.

 

Market Prices and Dividend Information (see page 29)

Atlantic Capital common stock is not publicly traded. As of September 14, 2015, there were 13,562,125 shares of Atlantic Capital common stock outstanding. Atlantic Capital has approximately 458 shareholders of record. Upon the completion of the merger, we expect that Atlantic Capital common stock will be listed on Nasdaq and will trade under the symbol “ACBI.”

First Security common stock is listed and trades on the Nasdaq Capital Market under the symbol “FSGI.” As of September 14, 2015, there were 66,797,923 shares of First Security common stock outstanding, and approximately 808 shareholders of record.

Comparison of Shareholders’ Rights (see page 140)

The rights of First Security shareholders who continue as Atlantic Capital shareholders after the merger will be governed by Georgia law and the amended and restated articles of incorporation and amended and restated bylaws of Atlantic Capital rather than by Tennessee law and the articles of incorporation and bylaws of First Security.

Risk Factors (see page 36)

Before voting at the Atlantic Capital or First Security special meeting, you should carefully consider all of the information contained in, or incorporated by reference into, this joint proxy statement/prospectus, including the risk factors set forth in the section entitled “Risk Factors” beginning on page 36 or described in First Security’s reports filed with the SEC, which are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 242.

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ATLANTIC CAPITAL

Set forth below are highlights derived from Atlantic Capital’s audited consolidated financial statements as of and for the years ended December 31, 2010 through 2014 and Atlantic Capital’s unaudited consolidated financial statements as of and for the six months ended June 30, 2015 and 2014. The results of operations for the six months ended June 30, 2015 are not necessarily indicative of the results of operations for the full year or any other interim period. The unaudited information was prepared on the same basis as Atlantic Capital’s audited consolidated financial statements. In the opinion of Atlantic Capital’s management, this information reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of this data for those dates. You should read this information in conjunction with “Atlantic Capital’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 171 of this joint proxy statement/prospectus and Atlantic Capital’s consolidated financial statements and related notes beginning on page F-1 of this joint proxy statement/prospectus and from which this information is derived. Certain of the measures set forth below are non-GAAP financial measures under the rules and regulations promulgated by the SEC. For a discussion of Atlantic Capital’s management’s reasons to present such data and a reconciliation to GAAP, please see “GAAP Reconciliation and Atlantic Capital’s Management Explanation for Non-GAAP Financial Measures” following the tables.

 

(in thousands, except per share data)		As of and for the Six Months Ended June 30,								As of and for the Years Ended December 31,
		2015				2014				2014				2013				2012				2011				2010
INCOME SUMMARY
Interest income		$	20,393			$	16,811			$	36,542			$	32,537			$	30,933			$	29,682			$	28,213
Interest expense			1,791				1,683				3,449				3,615				4,196				4,991				5,992
Net interest income			18,602				15,128				33,093				28,922				26,737				24,691				22,221
Provision for loan losses			549				(169	)			488				246				(1,322	)			7,144				2,813
Net interest income after provision for loan losses			18,053				15,297				32,605				28,676				28,059				17,547				19,408
Noninterest income			4,210				2,519				5,342				3,875				2,888				2,797				1,579
Noninterest expense			15,023				12,746				26,574				24,893				21,768				17,643				17,556
Income before income taxes			7,240				5,070				11,373				7,658				9,179				2,701				3,431
Income tax expense (benefit)			2,624				1,691				3,857				2,515				3,248				1,009				(8,607	)
Net income		$	4,616			$	3,379			$	7,516			$	5,143			$	5,931			$	1,692			$	12,038
PER SHARE DATA
Basic earnings per share		$	0.34			$	0.25			$	0.56			$	0.38			$	0.44			$	0.13			$	0.91
Diluted earnings per share			0.33				0.25				0.55				0.38				0.44				0.13				0.91
Cash dividends declared			—				—				—				—				—				—				—
Book value			10.80				10.11				10.48				9.77				9.57				9.09				8.94
Tangible book value(1)			10.72				10.09				10.41				9.77				9.57				9.09				8.94
PERFORMANCE MEASURES
Return on average equity			6.43	%			5.07	%			5.46	%			3.96	%			4.79	%			1.40	%			11.09	%
Return on average assets			0.68	%			0.58	%			0.60	%			0.46	%			0.58	%			0.20	%			1.57	%
Net interest margin			2.89	%			2.77	%			2.85	%			2.75	%			2.75	%			2.99	%			2.93	%
Efficiency ratio			65.41	%			72.23	%			69.14	%			75.90	%			73.48	%			64.18	%			73.76	%
Equity to assets			10.54	%			11.41	%			10.71	%			10.67	%			10.65	%			11.81	%			14.07	%

 

(in thousands, except per share data)		As of and for the Six Months Ended June 30,								As of and for the Years Ended December 31,
		2015				2014				2014				2013				2012				2011				2010
ASSET QUALITY
Non-performing loans		$	—			$	—			$	—			$	2,954			$	3,668			$	5,500			$	86
Foreclosed properties			27				1,531				1,531				1,531				1,531				1,775				1,775
Total non-performing assets (NPAs)		$	27			$	1,531			$	1,531			$	4,485			$	5,199			$	7,275			$	1,861
Allowance for loan losses			11,985				10,663				11,421				10,815				10,736				9,731				11,929
Net charge-offs			(15	)			(17	)			(118	)			167				(2,327	)			9,342				1,412
Allowance for loan losses to loans			1.13	%			1.14	%			1.10	%			1.32	%			1.44	%			1.39	%			1.83	%
Net charge-offs to average loans(2)			—				—				(0.01	)			0.02				(0.32	)			1.43				0.23
NPAs to total assets			—				0.13				0.12				0.36				0.43				0.71				0.22
AVERAGE BALANCES
Loans and loans held for sale		$	1,051,769			$	846,516			$	918,959			$	793,505			$	730,129			$	654,603			$	601,834
Investment securities			137,186				148,357				143,727				147,323				132,389				96,513				91,353
Earning assets			1,298,012				1,102,038				1,159,759				1,053,341				971,084				826,905				757,773
Total assets			1,362,857				1,169,179				1,227,230				1,118,527				1,028,155				857,619				767,376
Deposits			1,099,591				948,586				983,772				935,469				859,255				709,606				615,494
Shareholders’ equity			143,579				133,357				135,687				129,853				123,795				120,509				108,534
Number of common shares—basic			13,509,441				13,435,047				13,445,122				13,420,599				13,375,016				13,259,357				13,261,038
Number of common shares—diluted			13,846,975				13,635,375				13,641,882				13,531,952				13,408,443				13,259,360				13,261,038
AT PERIOD END
Loans and loans held for sale		$	1,058,456			$	933,749			$	1,039,713			$	817,002			$	810,745			$	700,562			$	652,577
Investment securities			140,716				148,847				133,437				145,743				127,751				125,361				91,241
Total assets			1,373,267				1,206,773				1,314,859				1,229,392				1,202,522				1,021,028				842,371
Deposits			1,103,061				992,918				1,105,845				1,081,153				1,025,811				874,379				690,861
Shareholders’ equity			146,485				136,167				140,929				131,235				128,084				120,573				118,516
Number of common shares outstanding			13,562,125				13,462,192				13,453,820				13,426,489				13,380,301				13,259,357				13,260,938

 

(1)	Excludes effect of servicing asset intangibles.

(2)	Annualized for quarterly periods.

GAAP Reconciliation and Atlantic Capital’s Management Explanation for Non-GAAP Financial Measures

Atlantic Capital’s accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. However, Atlantic Capital also evaluates its performance based on certain additional financial measures that are considered “non-GAAP” financial measures. Atlantic Capital classifies a financial measure as being a non-GAAP measure if that financial measure includes or excludes amounts, or is subject to adjustments that have the effect of excluding or including amounts, from the most directly comparable GAAP measure.

Atlantic Capital’s management utilizes measures involving a tangible basis which exclude the impact of intangible assets such as SBA servicing assets, as further described below.

Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. Atlantic Capital calculates (1) tangible common equity as shareholders’ equity less

 

intangible assets, net of accumulated amortization, and (2) tangible book value as tangible common equity divided by shares of common stock outstanding. The most directly comparable GAAP financial measure for tangible book value is book value per common share.

Atlantic Capital believes that this measure is important to many investors who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing tangible book value.

The following table reconciles tangible book value to book value per common share.

 

(in thousands, except per share data)		As of the Six Months Ended June 30,								As of the Years Ended December 31,
		2015				2014				2014				2013				2012				2011				2010
Book value per common share reconciliation
Total shareholders’ equity		$	146,485			$	136,167			$	140,929			$	131,235			$	128,084			$	120,573			$	118,516
Intangible assets			(1,055	)			(375	)			(782	)			(36	)			(32	)			—				—
Total tangible common equity		$	145,430			$	135,792			$	140,147			$	131,199			$	128,052			$	120,573			$	118,516
Common shares outstanding			13,562,125				13,462,192				13,453,820				13,426,489				13,380,301				13,259,357				13,260,938
Book value per common share		$	10.80			$	10.11			$	10.48			$	9.77			$	9.57			$	9.09			$	8.94
Tangible book value		$	10.72			$	10.09			$	10.41			$	9.77			$	9.57			$	9.09			$	8.94

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF FIRST SECURITY

First Security’s selected financial data is presented below as of and for the years ended December 31, 2010 through 2014 and for the six months ended June 30, 2015 and 2014. The selected financial data presented below as of December 31, 2014 and 2013, and for each of the years in the three-year period ended December 31, 2014, are derived from First Security’s audited financial statements and related notes included in First Security’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “First Security Form 10-K”), incorporated in this joint proxy statement/prospectus by reference and should be read in conjunction with the consolidated financial statements and related notes, along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the First Security Form 10-K. The selected financial data presented below as of June 30, 2015 and 2014, and for each of the six-month periods then ended, are derived from First Security’s unaudited financial statements and related notes included in First Security’s Quarterly Report on Form 10-Q for the period ended June 30, 2015 (the “First Security Form 10-Q”), incorporated in this joint proxy statement/prospectus by reference and should be read in conjunction with the consolidated financial statements and related notes, along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the First Security Form 10-Q. See “Where You Can Find More Information” on page 242. The selected financial data as of December 31, 2012, 2011 and 2010 and for each of the two years ended December 31, 2011 have been derived from First Security’s audited financial statements that are not included in the First Security Form 10-K. All per share data and the number of shares outstanding has been retroactively adjusted for the one-for-ten reverse stock split effected on September 19, 2011. Certain of the measures set forth below are non-GAAP financial measures under the rules and regulations promulgated by the SEC. For a discussion of First Security’s management’s reasons to present such data and a reconciliation to GAAP, please see “GAAP Reconciliation and First Security’s Management Explanation for Non-GAAP Financial Measures” following the tables.

 

		As of and for the Six Months Ended June 30,								As of and for the Years Ended December 31,
		2015				2014				2014				2013				2012				2011				2010
		(in thousands, except per share amounts and full-time equivalent employees)
Earnings:
Net interest income		$	16,590			$	14,470			$	30,901			$	23,370			$	23,580			$	27,779			$	34,681
Provision (credit) for loan and lease losses		$	1,350			$	(1,242	)		$	(1,452	)		$	(2,735	)		$	20,866			$	10,920			$	33,589
Non-interest income		$	6,362			$	5,665			$	12,258			$	8,683			$	8,146			$	8,100			$	9,503
Non-interest expense		$	21,569			$	20,546			$	41,668			$	47,760			$	47,659			$	47,628			$	45,258
Net income (loss)		$	(257	)		$	568			$	2,417			$	(13,449	)		$	(37,570	)		$	(23,061	)		$	(44,342	)
Income tax provision		$	290			$	263			$	526			$	477			$	771			$	392			$	9,679
Dividends and accretion on preferred stock		$	—			$	—			$	—			$	(1,381	)		$	(2,078	)		$	(2,053	)		$	(2,029	)
Effect of exchange on preferred stock to common stock		$	—			$	—			$	—			$	26,179			$	—			$	—			$	—
Net income (loss) available to common stockholders		$	(257	)		$	568			$	2,417			$	11,349			$	(39,648	)		$	(25,114	)		$	(46,371	)
Per Share Data:
Net income available (loss allocated) to common shareholders, basic		$	0.00			$	0.01			$	0.04			$	0.24			$	(24.58	)		$	(15.79	)		$	(29.46	)
Net income available (loss allocated) to common shareholders, diluted		$	0.00			$	0.01			$	0.04			$	0.24			$	(24.58	)		$	(15.79	)		$	(29.46	)
Cash dividends declared on common shares		$	—			$	—			$	—			$	—			$	—			$	—			$	—
Book value per common share		$	1.36			$	1.30			$	1.35			$	1.26			$	(1.94	)		$	21.44			$	37.55
Tangible book value per common share		$	1.36			$	1.30			$	1.34			$	1.25			$	(2.28	)		$	20.86			$	36.66

 

		As of and for the Six Months Ended June 30,								As of and for the Years Ended December 31,
		2015				2014				2014				2013				2012				2011				2010
		(in thousands, except per share amounts and full-time equivalent employees)
Performance Ratios:
Return on average assets			(0.05	)%			0.12	%			0.24	%			1.09	%			(3.57	)%			(2.25	)%			(3.55	)%
Return on average common equity			(0.56	)%			1.34	%			2.79	%			18.49	%			(170.65	)%			(47.76	)%			(46.81	)%
Return on average tangible common equity			(0.56	)%			1.34	%			2.79	%			18.63	%			(176.59	)%			(48.91	)%			(47.62	)%
Net interest margin, taxable equivalent			3.39	%			3.26	%			3.36	%			2.50	%			2.35	%			2.77	%			2.92	%
Efficiency ratio			93.97	%			102.04	%			96.55	%			149.00	%			150.20	%			132.75	%			102.43	%
Non-interest income to net interest income and non-interest income			27.72	%			28.14	%			28.40	%			27.09	%			25.68	%			22.58	%			21.51	%
Capital & Liquidity:
Total equity to total assets			8.25	%			8.55	%			8.41	%			8.56	%			2.74	%			6.12	%			7.99	%
Average equity to average assets			8.46	%			8.61	%			8.62	%			6.76	%			5.00	%			7.55	%			9.99	%
Tangible equity to tangible assets			8.24	%			8.53	%			8.40	%			8.53	%			2.68	%			6.04	%			7.88	%
Tangible common equity to tangible assets			8.24	%			8.53	%			8.40	%			8.53	%			(0.38	)%			3.15	%			5.16	%
Tier 1 risk-based capital ratio			10.8	%			12.4	%			11.91	%			13.64	%			4.23	%			9.70	%			11.20	%
Total risk-based capital ratio			11.9	%			13.6	%			13.00	%			14.89	%			5.49	%			10.96	%			12.47	%
Tier 1 leverage ratio			8.9	%			9.4	%			9.35	%			9.36	%			2.31	%			5.69	%			7.27	%
Dividend payout ratio			nm				nm				nm				nm				nm				nm				nm
Total loans to total deposits			82.9	%			76.0	%			73.28	%			68.02	%			53.68	%			57.12	%			69.33	%
Asset Quality:
Net charge-offs		$	217			$	(242	)		$	201			$	565			$	26,666			$	15,320			$	36,081
Net loans charged-off to average loans, annualized for quarterly periods			0.06	%			(0.08	)%			0.03	%			0.10	%			4.52	%			2.36	%			4.27	%
Non-accrual loans		$	6,745			$	4,891			$	4,348			$	7,203			$	25,071			$	46,907			$	54,082
Other real estate owned		$	4,441			$	7,717			$	4,511			$	8,201			$	13,441			$	25,141			$	24,399
Repossessed assets		$	—			$	8			$	8			$	12			$	8			$	302			$	763
Non-performing assets (NPA)		$	12,602			$	13,699			$	8,967			$	16,344			$	40,176			$	75,172			$	84,082
NPA to total assets			1.15	%			1.35	%			0.84	%			1.67	%			3.78	%			6.74	%			7.20	%
Loans 90 days past due		$	1,416			$	1,083			$	100			$	928			$	1,656			$	2,822			$	4,838
Non-performing loans (NPL)		$	8,161			$	5,974			$	4,448			$	8,131			$	26,727			$	49,729			$	58,920
NPL to total loans			1.07	%			0.91	%			0.67	%			1.39	%			4.94	%			8.54	%			8.10	%
Allowance for loan and lease losses to total loans			1.26	%			1.43	%			1.29	%			1.80	%			2.55	%			3.37	%			3.30	%
Allowance for loan and lease losses to NPL			117.63	%			157.35	%			192.22	%			129.14	%			51.63	%			39.41	%			40.73	%
Period End Balances:
Loans		$	764,411			$	659,539			$	663,622			$	583,097			$	541,130			$	582,264			$	727,091
Allowance for loan and lease losses		$	9,600			$	9,400			$	8,550			$	10,500			$	13,800			$	19,600			$	24,000
Loans held-for-sale		$	36,107			$	28,547			$	72,242			$	220			$	25,920			$	2,233			$	2,556
Intangible assets		$	34			$	233			$	134			$	330			$	600			$	982			$	1,461
Assets		$	1,098,909			$	1,012,685			$	1,070,244			$	977,574			$	1,063,555			$	1,114,901			$	1,168,548
Deposits		$	921,686			$	867,709			$	905,613			$	857,269			$	1,008,066			$	1,019,422			$	1,048,723
Common stockholders’ equity		$	90,622			$	86,566			$	89,980			$	83,648			$	(3,439	)		$	36,111			$	61,657
Total stockholders’ equity		$	90,622			$	86,566			$	89,980			$	83,648			$	29,110			$	68,232			$	93,374
Common stock market capitalization		$	163,689			$	144,594			$	151,027			$	153,187			$	3,952			$	3,958			$	14,776
Full-time equivalent employees			265				264				268				285				329				303				311
Common shares outstanding			66,812				66,633				66,826				66,603				1,772				1,684				1,642

 

		As of and for the Six Months Ended June 30,								As of and for the Years Ended December 31,
		2015				2014				2014				2013				2012				2011				2010
		(in thousands, except per share amounts and full-time equivalent employees)
Average Balances:
Loans, including held-for-sale		$	766,960			$	638,927			$	675,055			$	545,803			$	590,109			$	647,920			$	845,945
Intangible assets		$	91			$	289			$	240			$	466			$	781			$	1,239			$	1,691
Earning assets		$	992,533			$	910,180			$	928,976			$	958,453			$	1,024,472			$	1,028,654			$	1,213,145
Assets		$	1,077,521			$	986,988			$	1,006,392			$	1,039,941			$	1,110,794			$	1,118,646			$	1,306,831
Deposits		$	920,820			$	842,627			$	860,381			$	946,850			$	1,027,520			$	1,007,930			$	1,147,724
Common stockholders’ equity		$	91,115			$	84,979			$	86,720			$	61,382			$	23,233			$	52,584			$	99,067
Total stockholders’ equity		$	91,115			$	84,979			$	86,720			$	70,312			$	55,549			$	84,486			$	130,579
Common shares outstanding, basic—wtd			65,936				65,728				65,811				46,495				1,613				1,591				1,574
Common shares outstanding, diluted—wtd			65,936				65,732				65,815				46,504				1,613				1,591				1,574

GAAP Reconciliation and First Security’s Management Explanation for Non-GAAP Financial Measures

The information set forth above contains certain financial information determined by methods other than in accordance with GAAP. First Security’s management uses these “non-GAAP” measures in their analysis of First Security’s performance. Non-GAAP measures typically adjust GAAP performance measures to exclude effects of significant gains, losses or expenses that are unusual in nature and not expected to recur. Since these items and their impact on First Security’s performance are difficult to predict, First Security’s management believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of First Security’s core business. Additionally, First Security’s management utilizes measures involving a tangible basis which exclude the impact of intangible assets such as core deposit intangibles. As these assets are normally created through acquisitions and not through normal recurring operations, First Security’s management believes that the exclusion of these items presents a more comparable assessment of the aforementioned measures on a recurring basis.

Specifically, First Security’s management uses “return on average common equity,” “return on average tangible assets,” and “return on average tangible common equity.” First Security’s management uses these non-GAAP measures in its analysis of First Security’s performance, as further described below.

 

•

“Return on average common equity” is defined as annualized earnings for the period divided by average equity reduced by average preferred stock. First Security’s management includes this measure in addition to return on average equity, the most comparable GAAP measure, because it believes that it is important when measuring First Security’s performance exclusive of the effects of First Security’s outstanding preferred stock, which had a fixed return, and that this measure is important to many investors in First Security common stock.

 

•

“Return on average tangible assets” is defined as annualized earnings for the period divided by average assets reduced by average goodwill and other intangible assets.

 

•

“Return on average tangible common equity” is defined as annualized earnings for the period divided by average equity reduced by average preferred stock and average goodwill and other intangible assets. First Security’s management includes these measures because it believes that they are important when measuring First Security’s performance exclusive of the effects of intangibles recorded in First Security’s historic acquisitions, exclusive of the effects of First Security’s outstanding preferred stock, which had a fixed return, and these measures are used by many investors as part of their analysis of First Security’s performance.

 

These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. The following table provides a more detailed analysis of these non-GAAP performance measures.

 

		As of and For the Six Months Ended June 30,								As of and for the Years Ended December 31,
		2015				2014				2014				2013				2012				2011				2010
		(in thousands, except per share data)
Return on average common equity			(0.56	)%			1.34	%			2.79	%			18.49	%			(170.65	)%			(47.76	)%			(46.81	)%
Effect on average intangible assets			—	%			—	%			—	%			0.14	%			(5.94	)%			(1.15	)%			(0.81	)%
Return on average tangible common equity			(0.56	)%			1.34	%			2.79	%			18.63	%			(176.59	)%			(48.91	)%			(47.62	)%
Total equity to total assets			8.25	%			8.55	%			8.41	%			8.56	%			2.74	%			6.12	%			7.99	%
Effect of intangible assets			(0.01	)%			(0.02	)%			(0.01	)%			(0.03	)%			(0.06	)%			(0.08	)%			(0.11	)%
Tangible equity to tangible assets			8.24	%			8.53	%			8.40	%			8.53	%			2.68	%			6.04	%			7.88	%
Effect of preferred stock			—	%			—	%			—	%			—	%			(3.06	)%			(2.89	)%			(2.72	)%
Tangible common equity to tangible assets			8.24	%			8.53	%			8.40	%			8.53	%			(0.38	)%			3.15	%			5.16	%
Total stockholders’ equity		$	90,622			$	86,566			$	89,980			$	83,648			$	29,110			$	68,232			$	93,374
Effect of preferred stock			—				—				—				—				(32,549	)			(32,121	)			(31,717	)
Common stockholders’ equity		$	90,622			$	86,566			$	89,980			$	83,648			$	(3,439	)		$	36,111			$	61,657
Average total stockholders’ equity		$	91,115			$	84,979			$	86,720			$	70,312			$	55,549			$	84,486			$	130,579
Effect of average preferred stock			—				—				—				(8,930	)			(32,316	)			(31,902	)			(31,512	)
Average common stockholders’ equity		$	91,115			$	84,979				86,720				61,382				23,233				52,584				99,067
Effect of average intangible assets			(91	)			(289	)			(240	)			(466	)			(781	)			(1,239	)			(1,691	)
Average tangible common stockholders’ equity		$	91,024			$	84,690			$	86,480			$	60,916			$	22,452			$	51,345			$	97,376
Per Share Data
Book value per common share		$	1.36			$	1.30			$	1.35			$	1.26			$	(1.94	)		$	21.44			$	37.55
Effect of intangible assets			—				—				(0.01	)			(0.01	)			(0.34	)			(0.58	)			(0.85	)
Tangible book value per common share		$	1.36			$	1.30			$	1.34			$	1.25			$	(2.28	)		$	20.86			$	36.70